PACIFIC MERCHANDISING CORPORATION vs.

CONSOLACION INSURANCE
FACTS:
• In a Civil Case which was an action instituted by Pacific Merchandising
Corporation
(plaintiff-appellee) to collect the sum of P2,562.88 from Consolacion Insurance &
Co, Inc, who in turn filed a third-party complaint against Gregorio V.
Pajarillo (third-party defendant-appellant), the City Court of Manila r«tdered
judgment in
favor of the plaintiff and against the defendant, ordering the latter to pay the
former and
condemning third-party to pay third-patty plaintiff for whatever sums or amounts
the
latt« paid the plaintiff on account of this judgment.
Atty. Greg V. pajarillo was appointed as Receiver of all the assets, properties and
equipment
of Paris Theatre, operated by Leo Enterprises, Inc. The third-party defendant
Pajarillo applied
for a bond to beposted in favor of the above-named plaintiff in order to guarantee
to said plaintiff the payment of obligations in its favor by the Leo Enterprises,
Inc.; andto
protect third-party plaintiff against damage and injury, Pajarillo executed in
favor of the
former an INDEMNITY AGREEMENT.
or not a receiver can enter into any contrad without court' s approval.
RUUNG:
NO.
A receiver is not an agent or r4resentatWe of any party to the action. He is an
officer of the court
exercising his functions in the interest of neither plaintiff nor d&dant, but for
the common
benefit of all the parties in interest. Heperformshis duties "subject to the
control of the Court",
and every question involved in the may be by the court taking
cogiizance of the receivership proceedings. Thus, "a receiv«, stridly speaking has
no right or
power to make any contract binding the property or fund in his custody or to pay
out funds in his
hands wdhout the authority or approval of the court * • as explained by Justice
Moran, speakingfor
the Court in a 1939 case, The custody of the receiver is the custody of the court.
His acts and
possession are the acts and possession of the court, and his contracts and
liabilities are. in
contemplation of law, the contracts and liabilities of the court. As a necessary
consequence, a receWM is
subject to the control and supervision of the court at step in his management of
the property or
funds placed in his hands. He cannot operate independently of the court, and cannot
enter into any
contract without its approval.